Large shift in display panel production capacity
Under the epidemic, the global panel industry is changing rapidly.
According to Reuters news, a Samsung Display spokesperson said on March 30 that Samsung had decided to end all LCD (liquid crystal display) panel production by the end of this year. Prior to this, the CEO of LG Display announced in January 2020 that LG Display will cease LCD panel production in South Korea by the end of this year.
According to statistics from the Korea Display Industry Association, South Korea accounted for 41.1% of the global panel market last year. It has fallen for three consecutive years since 2016, and it is highly likely that it will continue to fall to 30% in 2020.
In contrast, the global share of China's panel industry is rapidly rising. According to South Korea's statistics, in 2019, small and medium-sized LCDs in mainland China accounted for 40.4% and large-sized LCDs accounted for 34.3%. CINNO Research's latest statistics show that in February 2020, based on shipments, mainland Chinese panel makers have accounted for nearly 60% of the global share in the LCD TV market.
A reporter from China Business Daily participated as an investor in the TCL Technology (000100.SZ) online performance exchange meeting on March 31. Zhao Jun, senior vice president of TCL Huaxing Optoelectronics, predicted in the exchange: "In 2020, Korean manufacturers will be on LCD panels. There will be an accelerated exit, and the new production capacity will be limited in 2020. We judge that the LCD TV supply and demand relationship will enter a tight state in 2022, so we remain optimistic about the market prospects for the next few years. "
In this context, some insiders predict that China's panel industry will maintain strong growth, which in turn will drive the development of upstream and downstream industry chains. The glass substrate is one of the important raw materials of the display panel. Hu Hengguang, general manager of Dongxu Optoelectronics (000413.SZ), China ’s No. 1 and No. 4 glass substrate supplier in the world, told reporters that China currently occupies nearly 50% of the global panel industry ’s production capacity, but there is still room for improvement. Further shifting to the domestic market, this trend is superimposed on domestic substitution, which is good for the entire industry chain.
Korean companies accelerate their withdrawal from LCD production capacity
Why has South Korean panel share declined continuously since 2016? This is related to the strategic choice of South Korea's "Gemini".
According to public information, LG Display released its mid-to-long-term strategy in 2015 and announced that it will focus its investment on large-size and flexible OLEDs (organic light-emitting diodes) and high-end LCDs. Under this strategy, LG Display is fighting and retreating. It plans to close the 3.5th generation line, the 4th generation line, and the 5th generation line as early as 2016. In fact, it was only implemented in the first half of 2017. In 2018, LG Display disclosed that it had closed three LCD production lines since 2017 and abandoned a plan for a new production line. In 2019, the closure plan will be extended to some 7th and 8th generation lines. According to LG Display ’s latest plan, the company will only retain its LCD production line in Guangzhou, China.
Samsung Display has also experienced a similar process. It also began a large-scale closure of LCD production lines around 2017. Up to now, there are still three large-sized LCD panel factories in South Korea and the 8.5 generation line in Suzhou, China. However, under the new coronary pneumonia epidemic, Samsung Display has made up its mind to stop all LCD production by the end of this year.
Samsung Display told reporters that in view of the sluggish LCD market and the resulting large-scale deficit, it stopped production of LCD products.
In January 2020, the CEO of LG Display told the outside world more directly, “The LCD market has deteriorated due to the increase in production of Chinese companies, and it is difficult to improve the profit and loss situation.” LG Display will stop the production of LCD TV panels in Korea at the end of this year.
In fact, from LCD supply and demand and price trends can explain why LG and Samsung began to accelerate the closure of LCD production capacity in 2017. Although Chinese panel makers continue to release production capacity, there has been a period of price increase in the second half of 2016 to the first half of 2017, and then it has really entered the downward channel. The industry generally believes that the global overcapacity will continue to intensify from 2019 to 2021, and the downward pressure on LCD prices will be greater.
Xinhan Securities analyst Li Xianye analyzed the media. Samsung Display's withdrawal from the LCD market means that Korean companies have completely lost their competition in the LCD panel market with competing companies such as China. The most fundamental reason is cost control.
Li Xianye believes that at present, the LCD panel market is saturated. Although Korean companies have certain cost control capabilities, it is difficult to further reduce the cost of closing the supply chain. Therefore, under the background of unlimited competition, Korean companies have almost lost their local production of LCD panels and are difficult to resist. The offensive of competitors.
The overall rise of the domestic panel industry chain
Korean companies have gradually compressed in the past few years and are now accelerating their withdrawal from LCD production capacity, which is undoubtedly a great benefit for Chinese panel manufacturers and upstream and downstream industry chains.
Taking the two major domestic panel companies-BOE and Huaxing Optoelectronics as examples, the global shipments ranked fourth and sixth in 2015; fourth and fifth in 2016, second and fifth in 2017, first and first in 2018 Fives. According to Sigmaintel data, in the first three quarters of 2019, BOE continued to maintain the world's first shipment volume and shipment area, and Huaxing Optoelectronics also rose to fourth in the world.
In the process of growth of the panel industry, Chinese manufacturers have also experienced many years of dismal management before slowly becoming formal.
The reporter sorted out that BOE's losses for many consecutive years did not turn into losses until 2011. In recent years, the performance has been ups and downs. In the past two years, the overall revenue has been close to 100 billion yuan and the net profit has remained at the level of several billion yuan.
Huaxing Optoelectronics also suffered losses in 2012. It started to account for 30% of TCL Group's net profit in 2013, and has been able to contribute about 50% of TCL Group's net profit in the last two to three years.
Industry insiders told reporters that the key structure of LCD liquid crystal panels is similar to a sandwich-two layers of "bread" (TFT glass substrate and color filters) sandwiched with "jam" (liquid crystal), and the rise of Chinese panel manufacturers in the world has also driven The growth of the upstream and downstream of the industrial chain.
Hu Hengguang told reporters that Dongxu Optoelectronics initially made PDP (Plasma Display) glass substrates for Sichuan Changhong. As plasma displays were replaced by liquid crystal displays, Dongxu Optoelectronics began to develop high-aluminum cover glass projects from 2008 to 2014 In February, it became the first domestic company to successfully mass-produce high-aluminum cover glass.
The high-aluminum cover glass is provided for LCD panels. Dongxu Optoelectronics has gradually entered the supply chain of major domestic panel companies such as BOE, Huaxing Optoelectronics, and Shentianma, and gradually increased its market share in the glass substrate field. The four major liquid crystal glass substrate production bases in Zhengzhou, Shijiazhuang, Wuhu, and Fuzhou gradually stabilized their domestic market positions and ranked fourth in the world.
It is understood that the new crown pneumonia epidemic at the end of the year and the end of the year has repeatedly affected Samsung Electronics and LG Display's factories in Gumi City, South Korea, and also allowed domestic related companies to gain market benefits.
"The most serious domestic outbreak is Wuhan, but as far as I understand, the local panel factories in Wuhan are all closed management, and the production capacity has not been affected much. And we see that the Korean outbreak has been affected (for related manufacturers) and their orders Demand will be transferred to domestic production. "Hu Hengguang said," We understand that the sales of some domestic display panel manufacturers have increased. For example, downstream customers such as BOE and Shentianma have also increased our demand for our sales. The data is still in my heart. "
According to data from the Jibang Consulting Optoelectronics Research Center, in January 2020, BOE and Huaxing Optoelectronics accounted for the top two in global shipments with 21.3% and 14.5% of the shipment area respectively. By February 2020, Huaxing Optoelectronics (18.56 %) Beyond BOE (17.23%) and become the world's first.
According to analysts from Jibang Consulting, unlike Huaxing Optoelectronics, which has sufficient materials and the earliest resumption time, BOE's factories have different locations and scattered labor, which greatly affects the efficiency of shipments.
The analyst also predicted that TV panel shipments in March will maintain a small increase compared with February.
Unlike the withdrawal of Korean companies, domestic manufacturers continue to be optimistic about the LCD market. For example, Zhao Jun said that in the future, 8K, full screen, ultra-large size, and Mini LED backlight will become the technology direction of LCD panels. Huaxing Optoelectronics is optimistic about the future market prospects, and actively adjusts the product structure, reduces the proportion of TV panels, and develops commercial display and e-sports markets. Wait.
Hu Hengguang also said that at present, LCD and OLED will not have a substitution relationship, the two have their own advantages in different environments, and will not reproduce the situation of LCD display replacing plasma display.
Continue to follow up the OLED market layout
While accelerating the withdrawal from LCD, both Samsung Display and LG Display are accelerating their transition to OLED. Among them, Samsung announced that it will invest 131,000 won (about 10.72 billion US dollars) to upgrade the LCD production line to an OLED production line.
LG Display has clearly stated that by 2021, the proportion of OLED revenue will be increased to 50%. Slightly different is that in the OLED market segment selection, LG Display chooses the large size market, while Samsung Display chooses the small and medium size market.
At present, the OLED market is still controlled by Korean companies. According to data from the Korea Display Industry Association, in the OLED field, the Korean market accounted for 89.9% of the market in 2019, which has an overwhelming advantage compared with the 9.3% market share of mainland China. Among them, in terms of small and medium-sized OLED panel shipments, Samsung Display, LG Display, and BOE occupy the top three in the world with market shares of 82.5%, 6.2%, and 5.9%, respectively.
In China, BOE has recently announced that it will stop investing in new LED production lines and accelerate the promotion of OLED layout. BOE OLED has entered the supply chain of major domestic mobile phone manufacturers such as Huawei, and it has repeatedly been reported that it will enter the iPhone supply chain. In the past two years, Huaxing Optoelectronics has been emphasizing that it will continue to cultivate in the field of printed OLED technology and serve as the key for Huaxing Optoelectronics to develop the large-scale OLED field.
The technological evolution and market layout of major domestic panel manufacturers are also leading in-depth follow-up in the upstream and downstream of the industry chain. Still taking the glass substrate supplier Dongxu Optoelectronics as an example, the annual report shows that the company has followed the development trend of OLED flexible displays since 2015, and adopted the horizontal expansion strategy of the industrial chain. New business such as diaphragm and color filter.
Among them, Dongxu Optoelectronics has already built a curved cover glass production line with a capacity of nearly 5 million pieces in 2018, and has achieved mass production and sales. Dongxu Optoelectronics' annual report stated that the company's star product "King Panda" in the field of curved cover glass has achieved a 360-degree bend in terms of flexibility, breaking the foreign technology monopoly and winning the first prize of the Sichuan Province Patent in 2018. Downstream customers such as Think Technology, Bonn Optics, Junda Optoelectronics, Xingxing Technology successfully penetrated into the important raw material supply chain of intelligent terminal brands such as Huawei, Xiaomi, LG, Lenovo, vivo, etc.
Hu Hengguang told reporters that the fierce advancement of 5G "new infrastructure" is particularly good for flexible display and other fields. "In the past, most smartphones used metal frames. This design will affect the 5G signal. Because 5G has a large bandwidth and a fast speed, the metal frame will cause a delay in signal transmission. Therefore, the development trend of 5G mobile phones is full screen and all glass. The frame requires the glass to be resistant to falling. "Hu Hengguang revealed that Dongxu Optoelectronics' mass production of falling cover glass last September and the flexible whiteboard glass that will be mass-produced and sold this year have been well received by downstream manufacturers.